--Google says net income shrank 20% in latest quarter
--Google shares fell 9% before trading was halted after
premature release of earning report
--Financial printer R.R. Donnelley says company is probing the
incident
(Adds R.R. Donnelley comment in sixth paragraph.)
By John Letzing and Ben Fox Rubin
Google Inc. (GOOG) is finding it tough to juggle a massive
acquisition and tumbling prices for ads in its dominant search
engine.
The Mountain View, Calif., company is also apparently finding it
difficult to properly time the release of its quarterly earnings
reports.
Google blindsided investors Thursday by releasing a downbeat
third-quarter report in the middle of the day--hours earlier than
anticipated--and before the market had safely closed.
The result: Google shares tumbled about 9% before trading was
halted.
In a statement, Google said its financial printer R.R. Donnelley
& Sons Co. (RRD) filed the quarterly results without
authorization.
An R.R. Donnelley spokesman said in a statement that the company
is "fully engaged in an investigation to determine how this event
took place."
In its premature report, Google said net income shrank 20% in
the quarter. Its results were weighed down by factors including an
operating loss of $527 million at recently acquired Motorola
Mobility.
Thanks in part to the Motorola acquisition, headcount ballooned
to more than 53,500, with about 17,500 of those working for
Motorola.
While use of Google's search engine grew, the prices it
commanded for search advertisements declined.
Google said its rate of paid clicks, or the number of times
users clicked on search ads, rose 33% compared with the period last
year. Meanwhile, the prices paid for those clicks declined 15%.
Google generally pulls in less revenue from advertising placed
on mobile devices than those on personal computers. As more people
use Google on phones, that has created a downward trend for overall
ad prices.
Google's stock had hit new highs in recent months, as concerns
about the Motorola acquisition faded. The shares are still up more
than 6% in the year to date.
Google closed its $12.5 billion purchase of cellphone maker
Motorola in May, in a bid to expand its influence over the hardware
market.
In August, Google said it would reduce Motorola workforce by
about 20%.
Overall, Google said Thursday its third-quarter profit was $2.18
billion, or $6.53 a share, down from $2.73 billion, or $8.33 a
share, a year earlier.
Excluding stock-based compensation and other items, profit fell
to $9.03 a share. Net revenue came in at $11.33 billion.
Analysts surveyed by Thomson Reuters had expected earnings of
$10.65 a share and net revenue of $11.86 billion.
Operating expenses jumped to $4.8 billion, Google said, from
$3.3 billion in the year-ago period.
Motorola contributed $2.58 billion in revenue in the latest
period. The unit's operating loss was $527 million.
Write to John Letzing at john.letzing@dowjones.com and Ben Fox
Rubin at ben.rubin@dowjones.com